GBP/USD has fallen 2.1% in 20 sessions to a 60-day low at 1.3202, pressured by a hiking Fed and US 10-year yields above 5.2%. The BoE's 6-3 hold with three hike votes offers sterling some support, but TNFX Research still expects rallies below 1.3311 to fade, with 1.3140 and 1.3099 in view.
This week: Expect choppy trade between the 1.3140 four-month low and the 1.3311 top of the 1-week sigma band. Oversold readings may give a lift toward 1.3273 before NFP on 2 Oct; a firm print opens 1.3177 and 1.3140.
End of October: Base case: an end-October close near 1.3099 (weekly S2) if the Fed hikes on 28 Oct, with the BoE not due until 5 Nov. Above 1.3360 the bearish view fails.
Key levels
Resistance
- R11.32730
- R21.33110
- R31.33600
Support
- S11.32020
- S21.31770
- S31.31400
Scenarios
- Trigger
- Weak NFP (unemployment above 4.1%) and a soft CPI, with BoE hike expectations building before 5 Nov
- Target
- 1.33600
Oversold sterling squeezes back above 1.3311 to the weekly R1 at 1.3360; beyond there the SMA20 at 1.3408 comes into view.
- Trigger
- Data keep the 28 Oct Fed hike priced near 70-77%
- Target
- 1.30990
Rallies fade below 1.3273-1.3311, the 1.3202 low breaks and GBP/USD grinds to 1.3140, then the weekly S2 at 1.3099 by end-October.
- Trigger
- Hot NFP and CPI, then hawkish Fed guidance on 28 Oct
- Target
- 1.30380
The slide cuts through 1.3099 to 1.3038 (last minus 3x ATR), taking out 1.3140, the low of the past four months.
What drives it
- Fed hike odds for 28 Oct at ~70-77% keep US yields and the dollar supported
- US 10-year above 5.2%, the highest since June 2007
- BoE at 3.75% held 6-3 on 17 Sep with three votes to hike, a partial floor under sterling
- Lower in each of the last three weeks, from 1.3540 to 1.3226; RSI 28.7 is oversold and warns of short squeezes
Dates to watch
US jobs report (NFP, September), 15:30 Mecca timeConsensus +90k, unemployment 4.1%. The only payrolls report before the FOMC; a firm print pressures GBP/USD toward 1.3140.
US CPI (September)August CPI was 3.4% y/y on energy +16.3%. A hot print reinforces hike pricing.
FOMC decisionA second 25bp hike is ~70-77% priced; hawkish guidance would extend the dollar's run.
BoE decisionThree members voted to hike in September; rising hike expectations into this meeting are sterling's main support in October.
Technical picture
Price is under the SMA20 (1.3408) and SMA50 (1.3458). RSI14 28.7 is oversold, so a pause or short bounce is likely. ATR14 0.0062 (about 62 pips a day); 20-day vol 0.29%/day.
What would change our view
A daily close above 1.3360 (weekly R1) voids the bearish view. A weak NFP plus a soft CPI and louder BoE hike talk could lift it back to the SMA20 at 1.3408.